Don't be fooled into falling for these 8 scams

By Dana Dratch
Published: April 01, 2014

You don't
have to be an April fool to get duped by a clever scam.

But, just as
with magic tricks, ruses lose their power when you know exactly how they work.

Want to
reduce your chances of being flimflammed? Here's the lowdown on eight hot scams, cons and swindles that criminals
are employing to separate you from your money, along with a few strategies for avoiding
them.

No.
1: 'Card security' scam
The
scam: Your get an automated call: Suspicious charges have been
detected on your credit or debit card. It's been frozen until you call to
reactivate it.

Press "2" for a live attendant, who will reinstate
your card after "confirming" personal information, such as your name, Social Security
number, account number and date of birth.

Criminals playing the odds may even mention your actual bank
by name and that, plus the robo-calling feature, "makes it seem more
credible," says Gary K. King, the attorney general of New Mexico.

"They reach out to thousands of people and know that
someone will bite," he says.

The
tipoff: When banks freeze a card for suspicious activity, the
cardholder usually has to initiate the call, King says. Hang up, and dial the
number on the back of your card.

Another variation: A text "alert" from your bank
or cellphone company that your account's been frozen. This text also offers a
live link. But with a scam, that link leads to a look-alike site that thieves
use to harvest personal information, says King.

The
solution: Skip the link, and just log in to your account as usual, he
advises.

And if you do get scammed, "don't be so embarrassed
that you don't report it," King says. "Scammers count on that."

Scam
No. 2: Sneaky phone charges
The
scam: Phone bill creeping upward? You could be a victim of "cramming."

Many phone companies allow you to pay for third-party
services by having charges added to your phone bill. It's convenient for things
you've authorized. But sometimes scammers attempt to have phantom fees added to
those bills, says Duane Pozza, an attorney in the financial practices division
of the Federal Trade
Commission.

The scam gets its name from the fact that third-party
operations are "cramming" their bogus charges onto real phone bills.

The
tipoff: On the bills, unauthorized "fees" can show up as
everything from horoscope alerts to ring tones, he says. The charges are often
small, anywhere from $1 to $9.99. But small charges are big business. One third-party
billing operation had to refund more than $1 million to consumers, as part of a
settlement with the FTC,
says Pozza. Another settled for a $10.9 million judgment, he says.

The
solution: Read your bill. If you don't recognize a charge, call your
phone company for an explanation, Pozza says, and request a
refund for anything you didn't authorize. Some phone companies also allow you
to block third-party billing.

Also, complain
to the FTC.
When it finds a pattern of "cramming," it can take action, says
Pozza.

Scam
No. 3: Ransomware and CryptolockerThe
scam: Your computer screen freezes displaying an FBI warning
banner: Illegal content has been detected, and the computer will remain locked
until you pay the fine.

The scam is known as Ransomware, and the notifications
"look very official," says Nickolas Savage, assistant special agent
in charge of the cybercrime branch of the FBI's Washington, D.C., field office

Depending on the variation, you may see a warning banner
from a "government agency" or "software maker." In a
different type of attack, known as Cryptolocker, you might simply get a pop-up
message demanding ransom in exchange for the encryption key to restore the
machine, he says.

The
solution: The best defense is preventive, says Savage. Regularly back
up data, download software patches and update anti-virus and anti-malware
programs, he says. Avoid illegal downloads, sketchy sites, and live links in
email.

If you are (or have already been) hit by this scam, contact
the FBI's Internet Crime Complaints
Center. "You very well could have the one piece of information"
that could help catch the criminals, says Savage.

Scam
No. 4: Late utility billThe
scam: Your utility company calls: You're behind on the bill. Pony
up your credit, debit or prepaid card number now, or it gets disconnected.

This is a scam, says Rose
Chan, a consumer advice counselor for Consumer Action.

The
tipoff: Utility companies send warnings, or use automated calls as
reminders. But you won't get a call from a utility worker demanding that you
make an immediate payment to them, says Chan.

The "cable reward" scam is a slight variation that
uses the carrot instead of the stick.

In this one, the "cable company" (or some other
utility), wants to give you a great price
on a service upgrade or new equipment (such as a DVR
or deluxe entertainment package). But you have to pay for it now with a debit,
credit or prepaid card.

An actual utility would just put any charges on your next
bill.

The
solution: Dial the customer service number on your last bill, she
says. That way, you know you're talking to someone from the utility company,
and you can verify what you owe and when.

Scam
No. 5: Gift card 'prize'
The scam: An email announces you've won a
high-dollar gift card from a popular retailer.

It could be
a scam, says Jason Schall, an attorney with the Federal Trade
Commission.

Click on
the link and you'll often be asked to "register" for your prize. That's
when you really go down the rabbit hole, he says.

Dangling
the promise of a prize, you're required to supply personal information and,
often, to buy things, too, he says.

In one
instance, consumers were told they couldn't receive their "prize"
until they purchased at least 13 items and referred three other people who
would do the same, he says.

The tipoff: If you haven't entered a contest, it's
unlikely someone will be contacting you about a prize, he says. And, with a
real prize, you usually don't have to register, supply financial information or
buy anything, he adds.

The solution: Be alert to any demand for personal information,
or that you buy something to get a prize. Scammers will try to keep you on the
hook to harvest as much cash and information as they can.

Scam
No. 6: Payday lending add-on scam
The scam: Applying for a payday loan online? "Make
sure you're not being signed up for other products," says Schall.

One site
charged applicants $55 for a debit card with a $0 balance, "something they
didn't want and never signed up for," he says.

In other
instances, consumers had to click through a series of screens with hard-to-see
boxes pre-checked to indicate the applicant approved extra goods or services,
plus the add-on charges that came with them, he says.

The tipoff: If you're applying for a loan, be
wary if the lender is trying to sell you other products, Schall says.

The solution: If you are determined to take out a
payday loan, research the company ahead of time. This is a company that will
likely be asking for your name and Social Security number, so you want to be
sure it's legitimate and has a good track record, Schall says.

They'll say something like, 'Oh, I see that
your computer has a lot of viruses. But if you give me remote access, I can
clean it out.'

-- Rose
Chan
Consumer Action

Sources of
information include your state's attorney general's office or consumer
protection office, friends or family who used the lender. Do a Web search with
the name of the lender and the word "complaints."

Scam
No. 7: ScarewareThe scam: You suspect
your computer's been infected. Luckily, you get a call from tech support at a
company whose name you recognize.

"They
try to make themselves sound like they're from a legitimate company, like
Microsoft," says Chan. "They'll say something like, 'Oh, I see that
your computer has a lot of viruses. But if you give me remote access, I can
clean it out,'" she says. And you can pay using a credit card, debit card
or just your bank account number.

Con artists
might be cold calling until they get a nibble, she says. Or they might have
gotten your information from an online request you filled out while searching
for information on cleaning malware from your computer. And thanks
to "spoofing" (the ability to make caller ID reflect any return
number or company name), you never know who's really on the other end of that
phone.

The tipoff: If you want computer help, you have to make the call. No one is
hovering in the ether "just happening to notice" when you have a computer
problem.

The solution: This scam
works best with people who aren't especially computer savvy, Chan says. Know your limitations, but don't let your befuddlement about computers lead you to surrender information you wouldn't dream of handing over in person.

Scam
No. 8: 'Government grant'
The scam: A government agent calls to announce
you've got a nice little windfall coming your way. And it can be loaded directly
to your debit or prepaid card.

This one's
been around for the last four to five years, she says. The details change -- the
promised money could be a refund, a government grant or a reward for being a
good citizen.

Sometimes
the scammer will weave in familiar details or mention an issue in the headlines
to make it sound realistic, Chan says.

The tip-off: "The government will never call
you directly," she says. It will "notify you by mail."

A second clue:
It's never smart to share card or account information with someone who calls
you, no matter who the person claims to be, she says. And a real government
employee would never call out of the blue to ask for it, she adds.

The solution: There really is an official government grant registry: Grants.gov. If you're on it, you can contact
the granting agency directly and bypass any scammers trying to steal your
money.